Inspiration from physics for thinking about economics, finance and social systems

Thursday, September 13, 2012

Optimism vs Pessimism

As I mentioned at the end of my post yesterday, many of the comments on my recent Bloomberg column chided me for being overly optimistic about the future of humanity, and especially about our capacity to create a sustainable future, especially through the intelligent use of technology to help us control and manage a complex world. The criticism was elegantly put by David Johnson:

I just saw your piece on Bloomberg
on augmenting our decision making skills artificially, and I am sorry
to say, based on quite a bit of painful experience, that this doesn't
actually work as one might hope.

I'm retired now, but I spent
nearly thirty years as a computer software designer, and I can't tell
you how many times I have seen people flatly refuse to believe
counter-intuitive results coming from some sophisticated program.

Indeed,
even simple instruments, such as pressure gauges can present results
that cause system operators to dismiss the data as the output of a
defective sensor.

For example, the accident at Three Mile
Island was the direct result of operators misjudging the meaning of two
gauges that were apparently giving contradictory readings. One gauge
implied that the level of cooling water was getting too high, while the
other implied that it was dangerously low. The operators could not
envision any scenario in which both could be correct, so they decided
(arbitrarily and without ANY cross-checking!) that the low reading was
invalid, and they shut down the emergency cooling water, which was
precisely the wrong thing to do.

In that case, it turned out that
there was a vapor lock in the plumbing connecting the two parts of the
system that the two gauges were monitoring, so, indeed, the pressure in
the cooling water supply was rising, even as the water level in the
reactor vessel itself was dropping dangerously. However, as simple as
this problem really was, it was totally outside the experience of the
operators, so they never considered the possibility. Moreover, the
system designers had not recognized the possibility either, or they
would have designed the plumbing differently in the first place.

My
point here is that a problem of this sort is stupidly simple compared
to the complexities of systems like the global climate, yet even trained
professionals cannot handle the level of weirdness that can result from
one unanticipated discrepancy.

In other words, we are generally
stupid enough that we cannot understand, much less accept, how stupid we
really are, so there is no way that the average person will casually
defer to the judgment of an artificial system like a computer program.

I received many comments making similar points, and I'd like to say that I agree completely and absolutely.

The way I look at the argument of Sander van der Leeuw is that he has identified a weak point in the nature of our relationship with the world. Our brains individually and collectively simply cannot match up to the complexity of the world in which we live (especially as our own technology has made it much more complex in recent decades). It's this mismatch that lies behind the pervasive tendency for our actions and innovations to have unanticipated consequences, many of which have led us to very big problems. Hence, he's suggesting that IF WE HAVE ANY HOPE of finding some solutions to our problems through further innovation it will be by finding ways to help our brains cope more effectively. He suggests information technology as the one kind of technology that might be useful in this regard, and which might help -- again, if used properly -- to heal the divide between the real complexity of the world and our pictures and models of it.

I think this makes a lot of sense, and it ought to inform our future use of technology and the way we use it to innovate. But I certainly wouldn't want to go any further and predict that we will actually be able to act in this way, or learn from this insight. If asked to bet on it, I would actually bet that humanity will have to suffer dearly and catastrophically before we ever change our ways.

Even more than stupid, we are stubborn. On this point I also could not agree more with David Johnson:

Seriously, the Arctic ice cap has
been more or less stable, within a few percent, for about three million
years, but now, in just thirty years, about 75% of the mass of ice has
disappeared. Yet, millions of people simply ignore this massive and
extremely dangerous change. Instead, they chalk up the reports as
evidence of a conspiracy by climate scientists to frighten taxpayers
into supporting more fictitious make-work for those self-same
scientists. That is a lethal level of stupidity, but it still passes
easily for "common-sense" among a very large fraction of the general
population.

11 comments:

The reasons of the ice caps that are melting are many, nonlinear, and chaotic. The earth's climate is not as simple (comparatively speaking) as a nuclear plant with two malfunctioning gauges, and the solutions are not as simple.

David Johnson may think the world needs to be cured from lethal stupidity. But hasn't suggested any solutions, only a problem (that the ice caps are melting! but only compare it to data 3 million years ago, not 10 or 50 million years ago.)

What's his solution? Reduce greenhouse gases? How about the two biggest greenhouse gases, CO2 and water vapor, how are we going to reduce that? What if we drastically reduce our greenhouse gas and we find another nonlinear variable that affects the Arctic ice cap?

Questioning the motivations of scientists is a lame argument against climate change, but to support David Johnson's implicit alarmism is unnecessarily eccentric.

That is idiotic, ice caps have been reliably observed for less than 50 years, proxies maybe go 150 yrs back with reasonable signal to noise ratio at most (very optimistic), and their reliability is questionable, beyond that we have some historic and anecdotal evidence (i.e. irregularly space point estimates). It's absurd to say the Artic ice cap has been stable within few percent for millions of years, no one has observed it. This is just like in finance where various idiots claim 5,10,20 sigma events and call then once in a universe lifetime events. There is clearly much confusion about confidence and probabilities.

A) Effectively, we have no previous experience with the abrupt melting of the entire Arctic ice cap.

B) Such melting is apparently happening.

C) But there is no cause for worry, because we have never seen this turn into a problem before.

My point is not that I know what is going to happen, but only that it looks stupid not to investigate this event very carefully.

Plus, the sheer size of the event strikes me as cause for worry in that our whole physical economy is rather delicately balanced, and any big jolt in the climate might unhinge things badly.

So, let me ask you a simple question: are you telling us all that we have nothing to worry about, even though a gigantic and unprecedented change is occurring?

Yes or no?

In any case, my original comment, in the email to Mark Buchanan quoted above, was simply that people tend strongly to shy away from weird news, and here you are, apparently demonstrating the point right off the bat.

You sound like someone who would rather he hadn't heard this news in the first place.

And, frankly, I'm very sympathetic. I would rather this were not happening either, but apparently it is, so I guess I will have to deal with it, whether or not I want to.

And, since I have children and others that I care about, I feel duty-bound to take an honest look at the situation, and not sweep things under the rug simply because I don't happen to enjoy dealing with them.

Thus, if you have convincing evidence that these climate changes are not a threat, I would be thrilled to see it. I really would.

The only catch is that it needs to be really solid, comprehensive data, and the logic of the analysis needs to be rock solid as well.

Nevertheless, that being said, I would really love to learn that there is no reason to worry after all.

Very nice article, Generally, optimism is connected to higher achievement. However, amongst those undertaking legal studies, optimism is connected to lower grades and pessimism to higher grades . Pessimists have an underlying attitude that their experiences will usually be negative and they also believe failures are their own fault. Unfortunately, pessimistic thinking is linked to depression. Optimism appears to have a strong beneficial effect on physical and mental health. Optimists are positive thinkers. There are several ways of "thinking positively". Pessimism is also bad for health. Pessimism makes people more liable to die of heart disease once they have it as well as more likely to get cancer in the first place. Business Research

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This blogexplores the potential for the transformation of economics and finance through the inspiration of physics and the other natural sciences. If traditional economics has emphasized self-regulation and market equilibrium, the new perspective emphasizes the myriad positive feed backs that often drive markets away from equilibrium and cause tumultuous crashes and other crises. Read more about the idea.

Who am I?

Physicist and science writer. I was formerly an editor with the international science journal Nature and also the magazine New Scientist. I am the author of three earlier books, and have written extensively for publications including Nature, Science, the New York Times, Wired and the Harvard Business Review. I currently write monthly columns for Nature Physics and for Bloomberg Views.